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Apple Inc. (NASDAQ:AAPL) is not the largest company based on revenue or market cap, but it is widely recognized as being the most successful and innovative company in the world.

Under the leadership of Steve Jobs, Apple Inc. (NASDAQ:AAPL) began an amazing period of innovation that started when the company completely revolutionized the music industry with the iPod and iTunes. This success was followed by Apple’s creation of the iPhone and the iPad, which I dare say were more successful than anyone (perhaps even Steve Jobs) could have imagined.

It was inevitable that competition would eventually catch up. There are numerous competitive products that are approaching the quality of the iPhone and the iPad. Although Apple’s current products are still popular, growth is definitely slowing, which has been reflected in Apple’s recent stock price decline. Apple Inc. (NASDAQ:AAPL) is in need of a new innovative product or strategy to re-energize its success, and the million dollar question is — What’s next for Apple?

Apple TV

Apple’s next dominant product may very well be an advanced TV system. There are rumors that Apple has plans to release a product later in 2013 that would consist of a 60-inch TV with an “iRing” and “mini-TVs”. The iRing would fit on the user’s finger and serve as an advanced remote controller. The mini-TVs would be the size of an iPad, and function as mobile devices utilized to view content from the main TV in other locations of the house.

There would be additional features, such as everyone’s friend Siri. Will Apple’s next product be as successful as the iPod, the iPhone, and the iPad? Only time will tell, but the odds are definitely in Apple’s favor.

What will Apple do with its cash?

Regardless of whether these rumors regarding the Apple TV are true or not, Apple has what all companies desire, a mountain of cash! What Apple does with this cash is critical to its long-term success. I believe that a portion of this cash should be used for a combination of the following:

Share buybacks and dividends are important to continue Apple Inc. (NASDAQ:AAPL)’s shareholder-friendly nature. An outstanding relationship between a company and its investors is a vital component of its long-term success. Apple initiated a dividend in 2012, and I believe they will continue a successful dividend payment policy which will include annual dividend payment increases.

Product development and research is key. Maintaining the most talented scientists and engineers is essential in order to stay a step ahead of the competition. Apple’s mountain of cash enables the company to achieve this goal.

Strategic acquisitions could pay dividends for Apple (literally). I am highlighting two successful companies that I believe are excellent acquisition candidates:

Nuance Communications Inc. (NASDAQ:NUAN)specializes in products that provide voice and language solutions for a wide variety of applications, including healthcare, education, automotive, and for domestic use. Nuance Communications Inc. (NASDAQ:NUAN)’s Dragon software transforms speech into text, and is quickly becoming a vital tool, especially during instances when saving time is critical.

Nuance’s Siri is utilized by Apple Inc. (NASDAQ:AAPL) as a voice activated app that can transform voice into text, as well as effectively answering questions by speaking back to the user. Nuance’s success in the medical industry is huge, and exciting opportunities exist within the automotive industry.

Nuance’s results have been impressive. Over the last five years, sales have increased from $602 million to $1.65 billion, and Nuance’s net income of $207 Million in 2012 is a significant improvement over the substantial loss five years ago. Nuance’s share price has performed well, increasing from $5/share in 2003 to a high of $28/share in 2012. The price has since pulled back to the low 20’s, making it a good time to open or add to a position.